Chiquita is more like NCR than Kasich will admit

Almost as soon as today’s news that Chiquita was moving its global headquarters out of Cincinnati, Kasich and his conservative supporters went into overdrive trying to make the case that this news is somehow different from the announcement of NCR moving its HQ out of Dayton under Governor Strickland.

After all, JobsOhio was formed under the theory that the Ohio Department of Development was poorly equipped to make compelling offers to keep companies from leaving Ohio. Kasich cited, ad nausem, NCR to claim that Ohio’s economic woes were not attributable to the national recession, but to Strickland’s failed leadership. Kasich claimed that he would have been more personally involved and has explicitly promised no “NCRs” on his watch. Something that Mark Kvamme himself has promised.

According to Chiquita’s CEO, the State of Ohio didn’t get seriously involve until U.S. Senator Rob Portman got involved. He states Kasich got involved, but doesn’t say how much or when. But here’s some of the excuses offered by Kasich (and his supporters) and why they’re bunk:

“Anything more than what Ohio offered would constitute as giving away the store.”

In his official statement, Governor Kasich suggested that the Administration was acting as responsible to taxpayers, and suggested that if it had done more it would have been the equivalent of “giving away the store.”

But how does the $6.5 million the State offers measure up to other deals the Kasich Administration offered (or for that matter, the Strickland Administration offered NCR?)

Company

Amount offered

# of jobs

Cost per “saved” jobs

American Greetings

$93,500,000

*1,750

$53,428.57

Wendy’s

$4,000,000

50

$80,000.00

Diebold

$57,000,000

*1,500

$38,000.00

Bob Evans

$11,800,000

400

$29,500.00

NCR (Strickland)

$31,000,00

1,200

$25,833.00

Chiquita

$6,500,000

313

$20,766.77

* Connotes deals in which the company can keep the State’s incentive package to stay in Ohio even if they cut jobs.

As you can see, the Chiquita offer was rather low compared to other offers the Kasich Administration has made, and even what Strickland offered NCR to stay. So, is Kasich conceded the earlier deals were ones in which he might have “given away the store?” Ohio probably couldn’t, or shouldn’t, try to match North Carolina’s offer, which would have, per job, worked to be north of American Greetings. However, it’s equally true that the offer Ohio made on Chiquita was substantially less per job than Kasich’s average and what he’s offered on some of the deals he himself has touted as success stories.

So it begs the question: did Ohio truly make its most competitive offer?

“The company has issues beyond what incentives can address.”

Specifically, Kasich today argued that Chiquita moved due to the lack of direct international flights out of Cincinnati. One conservative blogger even tried to credit Kasich for predicting this as being a problem in retaining Chiquita.

You know what Kasich did since identifying this as a problem back in February?

Isn’t leadership about solving problems, and not just identifying them for others? Hold that thought, was there’s issues for NCR beyond what incentives can address?

As a result, [NCR CEO Bill] Nuti said, the practicality of Dayton demanded a hard look. Transportation costs were high, and flights to and from the airport often required “multiple hops” for customers and employees. And attracting top talent was a struggle, he said. “We had a very difficult time recruiting people to live and work in Dayton.”

[Source: Berry, Dan. “In a Company’s Hometown, the Emptiness Echoes,” New York Times (Jan. 24, 2010).]

Remember Candidate Kasich acknowledging that NCR left due to the lack of direct flights in Dayton, and not the lack of a privatized economic development company? Me either.

Here’s a crazy thought. Perhaps instead of blaming our tax codes, labor unions, and government regulations for losing these jobs and in return frantically looking to throw millions at certain companies to try to entice them to stay, why don’t we instead take that money to, uh, I dunno, entice the airlines to offer more direct international flights out of Dayton and Cincinnati? Silly me, if the lack of flights out of the airports is costing us jobs, I would focus on it instead of, say, having the State’s lead economic development person develop new drivers licenses and license plates because the Governor doesn’t like them (even though the color of the license was specifically urged as a measure to deter forgeries.) Just a thought.

“[Chiquita] doesn’t want to be here or which has already made up its mind to leave.”

The end of the Governor’s statement suggests that Chiquita didn’t want to be in Ohio and had already made up its mind to leave. Assuming that is even true, can you imagine what Candidate Kasich would say if a company left Ohio and some suggested there was nothing to be done? Can you imagine if people had said that in Strickland’s defense?

Oh, wait, you already know that because that was exactly the situation with NCR. But don’t take my word for it, here’s what Republican Jon Husted said about NCR at the time:

“As a Monday morning quarterback, I can tell you there are probably lots of things that could have been done differently (by state and local officials), but I don’t think anything would have changed the outcome,” Husted said. “They (NCR executives) were never interested in engaging on the issue.” [Dayton Daily News 6/7/2009]

…

Jon Husted, an Ohio state senator, came away from the meeting feeling angry and frustrated. “They already knew they were leaving,” he said.

See, NY Times, supra.

By the time Strickland became Governor, most of NCR’s jobs had already shipped to Georgia:

[Nutti] also noted that the NCR of today has 22,000 employees around the world, and that by the time of the break-up announcement it had more employees in Georgia than the 1,200 it had in Ohio.

Id.

You see, Nutti was a CEO who operated out of NYC, despite the corporate HQ being officially in Dayton, while it had few employees in Ohio outside of its HQ, unlike in other States such as Georgia. Nutti never moved to Dayton, even though it was required in his contract. He even had the company stop making donations to the Dayton Development Coalition, the area’s private economic development corporation that was then run by one of Kasich’s now former Director of the Ohio Department of Development.

Despite this evidence, Kasich has never been deterred in suggesting that somehow the loss of NCR was avoidable, but for Strickland and the Ohio Department of Development. Again, this is one of the cornerstone for why we now have had JobsOhio forced down our throats, but was one of Kasich’s major arguments in his campaign. Not once was Candidate Kasich willing to consider that NCR was a company that just simply could not be persuaded to be kept. So, why is acceptable for Governor Kasich to make that argument?

At least Chiquita’s CEO worked in Cincinnati.

It’s okay because other companies are already slated to move into Chiquita’s building in Cincinnati.

The Kasich Administration’s last line of defense is to point out that OmniCare and Nielsen is poised to move into the building in numbers higher than those lost by Chiquita’s move. But that’s a crazy defense since those jobs were already in the region. In fact, just across the river. You can actually see where those jobs are today, and where they’re moving by just turning around at the riverfront. So, since these jobs are already in the region, their benefit to the local economy is rather minimal.

The real question is whether the State’s economic development efforts been too distracted with having to make the transition from a public to a private entity (Jobs Ohio still needs legislative approval to assume duties presently belonging to Development) or irrelevant, trivial projects like redesigning Ohio’s drivers license and plates (something that is normally left to the Ohio Department of Public Safety’s Bureau of Motor Vehicles, who was conspicuously absent from Kasich’s presser) that the Chiquita deal fell through the cracks or not given the attention it deserved.

When NCR announced it was moving its HQ to Atlanta, we quickly learned of Governor Strickland’s personal involvement in trying to prevent the move. When Chiquita announced, the Kasich Administration was quick to defensively dismiss any effort to prevent it from moving to be a lost cause. That’s the difference between NCR and Chiquita. Another term for the difference is: hypocrisy.

Czar Kashitch I is good at stealing pension funds, and divvying up tax revenues for his cronies, but I don’t think anyone with a blood alcohol level that is less than lethal can seriously argue that the Czar has EVER shown any business acumen. He was, and he is, a stupid, bought-off pretty boy frontman for the people who actually DO think about things. Things like raping the states, enslaving the workers, etc. etc.

Anonymous

Does this mean Wall Street Johnny’s new theme song is “Yes, We Have No Bananas”?

Anonymous

I’m surprised he didn’t blame the cops and firemen for the company leaving.

Anonymous

Poor John, he can’t even buy love.

clambake

Frankly, all these incentive packages are a raw deal for the taxpayer and it would be a wonderful thing if states did not engage in these wars.

Dmoore2222

Hmmm. Why am I not surprised by this? Could it be that the only reason this fool is the governor is voter anger and not any proven record of business success? Or maybe it’s because every time I’ve ever heard him speak, or read anything he’s said, it’s left me totally confused and dismayed. So to expect this cretin to manage anything the least bit complex would be foolish. If this is “operating at the speed of business,” then we’re in big trouble.

Anonymous

The chart showing cost per job is helpful. Another column would be great as well – average salary of jobs retained. These banana jobs were mostly R&D and executives, so the average salary was about $100,000. Kasich was offering 20% of that salary as incentive per job. I’d be willing to bet when compared to the other “jobs retained,” incentive as a function of salary would be MUCH higher.

Anonymous

You are correct. I haven’t compiled a chart, but my review of the news coverage of Kasich’s prior deals (including those of OmniCare and Nieslen) shows an average salary substantially (as much as half) below what is lost with Chiquita. However, Chiquita’s average is so high because it includes the CEO’s pay since it was a global HQ.

Anonymous

I agree. What’s really absurd about all this is the notion that these tax incentive deals can drive the economy. JobsOhio cannot repair Ohio’s economy as effectively as the market can on its own. In this regard, I have more faith in the free market and leaving government out of it than Kasich. Weird, I know.

clambake

Yeah, conservatives are ridiculous in asserting that they are proponents of the free market when you look at all sorts of policies espoused by them.

CSU_Prof

This just shows that the most important factor in improving the economy in Ohio will be public investment in infrastructure.

Phil

Minor typo:

“According to Chiquita’s CEO, the State of Ohio didn’t get seriously involve into U.S. Senator Rob Portman got involved.”

Should probably be:

“According to Chiquita’s CEO, the State of Ohio didn’t get seriously involved until U.S. Senator Rob Portman got involved.”

Excellent analysis.

stryx

Don’t forget Marathon! They weren’t even leaving!

“Marathon Petroleum will get a 75 percent, 15-year job-retention tax
credit from the state to keep its 1,650 employees in Findlay and a 60
percent, 10-year job-creation tax credit intended to trigger the hiring
of 100 employees.

in the same article John Kasich clearly states that Marathon had never once signaled any intentions of leaving Ohio.”

I guess there is something to be said for the “Invisible Hand”. Maybe Adam Smith is available on audiotape since Kasich doesn’t read anything in print.

seditious

Modern’s corporatist leanings are on display here as he criticizes K-sick for not offering enough corporate welfare to Chiquita. But now he’s boxed himself in and can’t criticize K-sick for offering Sears too much.

The solution is to forbid these companies from playing one jurisdiction against another and to make sure they pay their fair share for the commons they use (police and fire protection, educated workforce, courts to enforce contracts, etc). That can be done by passing laws that would strip states or localities of state/federal highway funding if they try to financially bait companies from other jursidictions.

Anonymous

Look, I fail to see how I as someone who has extensively written about how JobsOhio isn’t an economic pancea because these corporate welfare deals have virtually little impact on the overall economy, especially for their costs, somehow makes me a “corporatist” leaner.

If you think that, then you need an adult literacy class.
Congress can’t control state spending by conditioning highway dollars on how states’ spend state revenues that have no connection to highways. Regardless, good luck getting such a bill passed with John Boehner as Speaker, or did you forget who is in the majority in Congress?

Anonymous

The point of the article, which you apparently missed, is to point out that Kasich’s rhetoric about how they did everything they could and should doesn’t square with the reality of other deals Kasich has touted as “successes.”

If Ohio couldn’t justify spending any more to keep Chiquita because to do so would be “wasteful,” then isn’t that a tacit admission that the “success” stories touted by Kasich should be considered wasteful, then? Kasich can’t have it both ways.